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Bitcoin Crime Government

Bitcoin Transactions Lead To Arrest of Major Drug Dealer (techspot.com) 169

Posted by EditorDavid from the bitcoin-and-beards dept.
"Drug dealer caught because of BitCoin usage," writes Slashdot reader DogDude. TechSpot reports: 38-year-old French national Gal Vallerius stands accused of acting as an administrator, senior moderator, and vendor for dark web marketplace Dream Market, where visitors can purchase anything from heroin to stolen financial data. Upon arriving at Atlanta international airport on August 31, Vallerius was arrested and his laptop searched. U.S. Drug Enforcement Administration agents allegedly discovered $500,000 of Bitcoin and Bitcoin cash on the computer, as well a Tor installation and a PGP encryption key for someone called OxyMonster...

In addition to his role with the site, agents had identified OxyMonster as a major seller of Oxycontin and crystal meth. "OxyMonster's vendor profile featured listings for Schedule II controlled substances Oxycontin and Ritalin," testified DEA agent Austin Love. "His profile listed 60 prior sales and five-star reviews from buyers. In addition, his profile stated that he ships from France to anywhere in Europe." Investigators discovered OxyMonster's real identity by tracing outgoing Bitcoin transactions from his tip jar to wallets registered to Vallerius. Agents then checked his Twitter and Instagram accounts, where they found many writing similarities, including regular use of quotation marks, double exclamation marks, and the word "cheers," as well as intermittent French posts. The evidence led to a warrant being issued for Vallerius' arrest.
U.S. investigators had been monitoring the site for nearly two years, but got their break when Vallerius flew to the U.S. for a beard-growing competition in Austin, Texas. He now faces a life sentence for conspiracy to distribute controlled substances.
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Bitcoin Transactions Lead To Arrest of Major Drug Dealer More

Bitcoin Transactions Lead To Arrest of Major Drug Dealer

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  • DeVry grad speaks (Score:3)

    by Hognoxious ( 631665 ) on Saturday October 07, 2017 @05:38PM (#55328629) Homepage Journal

    But blockclouds are androgynous and so this breaks the fifth amendment!

  • Sounds like the vast majority of the crimes were committed in France and Europe. So he is being sent to Miami???

    • Easy question (Score:3, Informative)

      by Anonymous Coward

      Because some of his customers were in the USA and he was dumb enough to fly to Texas. Not that he would've likely gotten away, anyhow: selling drugs is illegal on both sides and there are extradition treaties in place.

      I suggest taking a class on legal procedure if this is confusing to you. It's not the least bit surprising to me.

    • Re:Jurisdiction (Score:4, Informative)

      by ravenshrike ( 808508 ) on Sunday October 08, 2017 @04:13AM (#55330123)

      He sold at some point to US customers. The thing is, it's his own damn fault that he was caught. He brought a completely unencrypted computer with all the evidence needed to convict his stupid ass to US soil. Methinks he had been partaking of his own stash too often.

  • "anonymous" cash (Score:1)

    by Anonymous Coward

    I'd always been puzzled by how some people seem to imply use of bitcoin is somehow "anonymous". It may be anonymous *now*, but remember - every transaction lives on the blockchain FOREVER. Do something illegal with bitcoin and you can be found out years and years down the road (you better hope it's something covered by a statute of limitations).

    • Except that apparently you can get away with collecting ransomware payments in BTC for as long as you want to. Why the charmed life for this one crime?

      • The US arrests known malware authors when they step foot in the country as well. Quite a few such cases have been covered here.

    • Re: "anonymous" cash (Score:1)

      by Anonymous Coward

      Yeah well, it's possible to keep it anonymous.
      Just always use a secret laptop that only gets online with tor. Always connected with someone else's wifi. Never log into any account that wasn't made on that laptop.
      Never use your btc wallet with any bank account. So your only chance of get money is to buy and sell drugs.

    • Re:"anonymous" cash (Score:5, Informative)

      by Kaenneth ( 82978 ) on Saturday October 07, 2017 @06:44PM (#55328849) Journal

      There are coin 'tumbler' services where you send in, for example, 100 BTC, which is then randomly swapped with BTC sent by other users, and then 98 BTC is send to the address you specified. If the tumbler service keeps no records, and isn't being bugged, it's effective.

      https://en.wikipedia.org/wiki/... [wikipedia.org]

      • Re: (Score:2)

        by Plugh ( 27537 )
        As you noted, with a tumbler you are trusting that the people running the service aren't malicious actors (a government or other organized crime racket, ha ha). But there are cryptocurrencies -- notably Monero [getmonero.org] -- that have such mixing built into the protocol itself. no reliance on a benevolent 3rd party

      • Re: (Score:1)

        by Anonymous Coward

        There are coin 'tumbler' services where you send in, for example, 100 BTC, which is then randomly swapped with BTC sent by other users, and then 98 BTC is send to the address you specified. If the tumbler service keeps no records, and isn't being bugged, it's effective.

        And just how many of those tumblers are honeypots run by the FBI?

      • With tumblers you exchange dirty money for dirty money - not much of an improvement really - also it can be a honeypot.

    • > It may be anonymous *now*, but remember - every transaction lives on the blockchain FOREVER.

      Even if they were individually protected from tracing, becaase for example they were built on rootkitted AWS servers or various worldwide rootkitted botnets: the owners of the various exchanges have _not_ proven trustworthy. It's very difficult to have confidence in people convicted of attempting to murder their business partners, as the arrest and convictions of the leader of the Silk Road Exchange has shown. A

    • The stupidity wasn't using bitcoins, it was that he didn't encrypt his hard drive properly.

  • ... Is not the same as 'anonymity' because in a criminal case you just catch people and offer them immunity if they help you find the identity of the other people they sent or received money from.

    tl;dr - if you're doing illegal stuff Bitcoin is much less anonymous than cash transactions.

  • A beard growing competition!! (Score:3)

    by connect4 ( 209782 ) on Saturday October 07, 2017 @05:50PM (#55328669)

    This was the DEA's greatest sting yet! Would he have won!? We'll never know!

    Bitcoin is like a filter for this type of stupidity.

    • I dunno. There's probably a lot of low-digit Slashdot users who could fall for a trap like that.

  • Who is stupid enough to bring a "work" computer into the United States?

    • Re: (Score:2)

      by gweihir ( 88907 )

      Somebody that is stupid enough to trust in the anonymity of a not really anonymous crypto-currency, apparently.

    • There is a time and a place for "steganography" Border crossings are one of those.

      • Has nobody heard of the world-wide network known as "The Internet"? Why would you take any incriminating data past a border crossing if you can just download it once you are in the country? Using steganography would mean one would have to think ahead, and if you're thinking ahead you wouldn't physically bring your incriminating data past the border anyway. The exception would be authoritarian countries that have the entire country firewalled off, but even in that case it is easier to get around the firew

  • Victory!!! ...? (Score:5, Interesting)

    by fafalone ( 633739 ) on Saturday October 07, 2017 @06:08PM (#55328727)
    Surely the War On Drugs has been won now right??? Or we're at least really close??

    What, no?? But how can that be! All other drug dealers must have seen the life sentence and were immediately deterred, no?

    Look, drugs like oxycodone/heroin/opiates and cocaine are extremely dangerous and can have devastating consequences when they're abused. Nobody is denying that. But they can't be forcibly eradicated. Given that, drug policy should seek to *minimize* the harm these drugs cause; but prohibition instead *maximizes* it.
    To repeat what I said last time this came up,
    The real problem is our inability accept facts and logic. Eliminating drug abuse by forcefully stopping it wasn't an entirely unreasonable thing to try, especially back then when the issue wasn't well studied. But it's 100 years now since the first drug prohibition, and >40 of the modern War on Drugs. It has been demonstrated beyond any doubt that no matter how harsh the penalties, even the death penalty for drugs some countries have, prohibition does not work. Anybody can get any drug they want, even in maximum security prisons. Our 4th Amendment rights are nearly dead largely because of this. Loads of other rights are seriously damaged. Police becoming heavily armed soldiers with us as the enemy are a consequence of this. You might be able to justify all that, and the millions upon millions of lives ruined, and the hundreds and hundreds of billions of dollars spent, if it was eliminating or seriously reducing the harm drugs cause to society... but it unequivocally is not.
    Drugs like cocaine, heroin, and meth have horrific consequences when they're abused; to the user, to their family, and to society. Since eliminating them is absolutely never gonna happen, we should instead pick the policy that minimizes the harm caused. Most people are simply incapable of accepting that criminal prohibition instead takes these very harmful substances, and increases their harm by orders of magnitude, and strips everyone of their civil rights.
    If you want to:
    -Minimize the number of addicts,
    -Minimize the number of ODs,
    -Minimize acquisitive crime (property crime to raise money),
    -Minimize violent crimes,
    -Maximize opportunities for people with abuse issues to get help,
    Then you have to provide tightly regulated, but legal, access, to all drugs. There's been extensive studies on this, it's not some random idea, it's a thoroughly studied and validated fact. Use does not increase. Portugal decriminalized all drugs for personal use; use went down. Turns out there's not loads of people saying 'gee, I sure wish heroin wasn't illegal, I'd try it otherwise'; something compounded by the fact the people most likely to develop an abuse issue are the least likely to be deterred by legality. All of the money currently spent on prohibition would instead go to education, prevention, and treatment- every dollar spent on that reduces drug abuse more than a dollar spent on prohibition. The money taken away from violent criminal organizations would completely cripple them. There'd be more cooperation with police who weren't constantly breaking down doors and shooting dogs, or sexually assaulting people on the side of the road with cavity searches (seriously, google roadside cavity search). There'd be less harassment when police couldn't bump their numbers with petty drug crimes.
    It's a hard fact to swallow, because you see the damage drugs can do, and desperately want that to never happen. But since that's impossible, you have to instead mitigate. However bad you think a given drug is, prohibition makes it worse. Whenever you say "Well, $x shouldn't be illegal because $y", $y is made worse, not better, by keeping it illegal.

    Additionally, Portugal has gone farther down this route than any other country, decriminalizing even cocaine and heroin for personal use. The result? The number of addicts plummeted, and remains far below the rest of Europe. Violent crime went down. Drug usage didn't go up. The NYTimes just covered this [nytimes.com].

    • Re: Victory!!! ...? (Score:4, Funny)

      by Anonymous Coward on Saturday October 07, 2017 @06:14PM (#55328751)

      Shit man, trying to read that word salad makes me want drugs.

      • I know it's a long rant, but it's a complex issue. People have a strong emotional response to the idea of legalizing hard drugs, and overcoming that and the "it's bad so it must be stopped" reaction is an uphill climb, chipping away one by one at the reasons people can't bring themselves to accept reality.

        • Re: Victory!!! ...? (Score:2, Funny)

          by Anonymous Coward

          Don't apologize, everything you said is correct but reading more than 100 words is a struggle for some people. Remember those things we had in the old days? Some of them had many thousands of words and no pictures. Books! That's what they were called. Give one of those to a young person and they start crying.

    • Of course there are easier, more rational approaches that would nearly eradicate the drug epidemic in the US. No half intelligent person would dispute that fact. Like most issues in the US though, they are intentional, self inflicted and mostly driven by greed. The war on drugs fits into every aspect of the government's agenda so will likely not be replaced anytime soon. The reason it hasn't ended is because nobody in the government or contractors want it to end. Same reason we will stay in a perpetual stat

      • > Of course there are easier, more rational approaches that would nearly eradicate the drug epidemic No half intelligent person would dispute that fact.

        If people had self discipline, as any half-intelligent person should, addiction and drug related crime wouldn't occur. Neither would child abuse or serial murder. And yet, they do. It takes a very small number of "half-unintelligent" people to create enormous problems with addiction, with drug abuse, and with crime resulting from it. Even for reasonable

        • Are there rational approaches that would almost eradicate it? I must disagree: It has roots in human physiology, in human weakness, in crime, and in politics that make it extremely difficult to eradicate.

          No doubt. None of the policies, prohibition, decriminalizing, or legalization, would almost eradicate it. But which one of those results in the *least* harm to both addicts and society? The answer is legalization (tightly regulated legalization, not talking about over-the-counter).

          I'm afraid it's not one problem, so it can't be defeated by a single logical analysis.

          The details vary, but the policies fall under one of the 3 umbrellas just mentioned. Right now, every single policy in every single state boils down to trying to eradicate drug abuse at the end of a gun, locking people up.

          This occurs for _any_ nation that invades Afghanistan.

          Ironical

          • >> This occurs for _any_ nation that invades Afghanistan.

            > Ironically the Taliban are the only ones to ever stop opium production there.

            May I disagree? I suggest that "not being at war" was the factor that curtailed opium production. I suggest that it wasn't merely that the Taliban were in charge, it was that food crops could be grown, harvested, and distributed legally, possibly even at a profit. For people in a war zone, short-term profit with smaller investment and more easily portable goods bec

            • You disagree with opinions, not with facts. Under Taliban control, opium was steadily produced year after year (fact). Then, they issued a decree banning it (fact). Immediately after, production went from 3000t to 200t (fact). The next year, the Taliban lost power (fact) and production immediately went back up to 3000t (fact). Food crops could always be grown, even for a profit; but they'll never be as profitable. Not only that, the US tried paying farmers to grow legal crops at the same profit level as pop

    • Re: (Score:2)

      by gweihir ( 88907 )

      Surely the War On Drugs has been won now right??? Or we're at least really close??

      Really close. For something like 100 years now. There are even statistics that show this war is getting more and more expensive, while the number of drug-addicts is long-term stable. Imagine what would happen if all that money would not be spent on fighting drugs. The US would probably have a billion addicts within a few years!

      My personal take is that this "war on drugs" is really a religious extremist "war on fun", where anything besides prayer must never be fun. If they had not failed so badly with alcoho

    • of the war on drugs, which is getting rid of undesirables.

      Think of it like this. If you're poor odds are good you take some drugs to cope or know somebody who does. Now, ask yourself what happens if you wander into a a well-to-do neighborhood to say use their parks or send your kid to their schools? You get arrested. And with Civil Asset Forfeiture law you don't even have to be guilty of anything.

      Don't believe me? Who were the biggest pot smokers around the time it was made illegal? Answer: Mexican
      • That's absolutely why the ruling class wants the War On Drugs. Alcohol and tobacco got a pass because they were the preferred substances of the rich, white, and powerful... while, as you describe, other drugs were preferred by undesirable minorities. Just look at how they justified it... running commercials about how marijuana or cocaine caused nice white girls to lose their minds and start sleeping with black people (something largely viewed as morally repugnant at the time, kind of like how we regard best

        • While they couldn't use propaganda as overtly racist, crack was preferred by poor black people, while powder cocaine was preferred by rich white people. So thinly veiled racist propaganda led to requiring 100x as much powder cocaine to trigger the same mandatory prison terms as crack.

          This contradicts the historical record. The Black Leaders of the time were the ones calling for the stiff penalties due to out of control crime. For example gangs were massively prevalent in the 80s - urban homicide rates corroborate this.

          Cite 0 [slate.com]
          Cite 1 [wnyc.org]
          Cite 2 [npr.org]
          Cite 3 [latimes.com]

    • Surely the War On Drugs has been won now right??? Or we're at least really close?? What, no?? But how can that be! All other drug dealers must have seen the life sentence and were immediately deterred, no?

      Not all but it has stopped some. For example, I've contemplated some sort of drug trafficking/dealing business as a way to make cash, but every time I do the numbers the risk of a long prison sentence is too great.
      There are measures of success that don't require a 100% hit rate.

  • ...drug lords, kid touchers, and terrorists laundered another couple billion in fiat currency today.

    Just like any other day.

  • Basic OpSec? (Score:4, Insightful)

    by Anonymous Coward on Saturday October 07, 2017 @06:16PM (#55328763)

    Why would anyone who runs a dark web market enter the United States with a laptop? How f'ing amateur is that? He shouldn't have even had a smartphone. Go to an internet cafe or buy a $300 Chromebook when you arrive.

  • So he knew enough about how to use the darknet, bitcoin, and PGP, but not to encrypt his actual files/login or store them outside of local storage.

    Seems a little off to me.

  • Vallerius flew to the U.S. for a beard-growing competition in Austin, Texas

    Proving once again, as many cops say, most crooks are stupid.

    • Proving once again, as many cops say, most crooks are stupid.

      Cops are stupid too, the difference is they get be wrong as many times as they like, whereas the crooks only have to get it wrong once and they are taken out of circulation. So the game is biased in favour of the cops, it has nothing to do with smarts.

      • Proving once again, as many cops say, most crooks are stupid.

        Cops are stupid too, the difference is they get be wrong as many times as they like, whereas the crooks only have to get it wrong once and they are taken out of circulation. So the game is biased in favour of the cops, it has nothing to do with smarts.

        In my experience, most cops aren't that stupid, especially compared to crocks; although I agree tehy have an advantage as they only have to be right once whereas a crook can't make a mistake.

  • Sounds like a PSA (Score:4, Insightful)

    by clovis ( 4684 ) on Saturday October 07, 2017 @06:42PM (#55328841)

    The story sounds like a PSA for what happens if you do drugs.
    So here is someone making a boatload of money from a criminal enterprise, but nonetheless decides it would be a good idea to fly to the USA carrying almost as much incriminating evidence as possible. And in a world that has an Internet with every photo app imaginable, he does it so people can look at his beard in person. In the USA.
    This is your brain on drugs.

  • Should have used Monero! (Score:5, Interesting)

    by Plugh ( 27537 ) on Saturday October 07, 2017 @07:29PM (#55329009) Homepage

    This is why more and more darknet marketplaces are accepting Monero [getmonero.org]. It's like having a mixer built in to the protocol itself. And to make things even better, the Monero blockchain is itself encrypted. Unless you are one of the participants in a transaction, you can't see what address the coins were sent from, who they were sent to, or how much was sent. And they are in the process of integrating with i2p for even better anonymity.

    Disclaimer: I hold quite a bit of Monero. But that's because I honestly think it's the best and fastest-growing "privacy cryptocurrency"

  • Not encrypting his harddisk did him in.

  • Encrypt your hard drives, and then power down the device before going through any checkpoint. You may want to keep some of your coin in a cold wallet for bail and/or a lawyer.

  • Question on Jurisdiction (Score:4, Interesting)

    by ytene ( 4376651 ) on Sunday October 08, 2017 @02:53AM (#55329981)
    If Vallerius is guilty of the charges being made against him, then I have absolutely no problem with due legal process being used to hand down the appropriate due punishment.

    However, reading the OP, a question regarding jurisdiction springs to mind. The extract quotes a DEA agent, who says (of Vallerius), "His profile listed 60 prior sales and five-star reviews from buyers. In addition, his profile stated that he ships from France to anywhere in Europe."

    I ask this question because I am trying to understand how the Unites States Government believes that it has standing to prosecute in this case? The only logical answer to that question that I can see would be if the transactions conducted on the darknet actually took place on US soil - but even that seems to me to be somewhat of a vague area of international law.

    Perhaps another reader can clarify this point for me: if we have three directly involved parties [a buyer, a seller and the platform-running middle-man] in a transaction, plus perhaps the network connections between them, then how would an international court of law decide the location and/or terms under which a case could be brought? Is it the law of the land for the buyer, the seller or the middleman? Does the fact that any identifiable part of an illegal transaction takes place within a nation's jurisdiction give that nation the right to prosecute a case?

    I will re-iterate what I said at the beginning of this post: I have no sympathy for anyone involved in selling drugs. But in order for society at large to respect the law, we need to trust the law. We need to see that the law is applied transparently, consistently and fairly. We need to understand both the powers and the limits of the law. Without these things, then as individuals within that society, we are at risk from all sorts of different types of corruption and injustice.

    Very interested to know if anyone can clarify this...

    • Is it the law of the land for ...

      The clue is in the title. If anyone involved in the transaction is in a place (The Land) where the activity is illegal (The Law), then it's illegal in that place and can be tried there.
      TFA doesn't contain enough information, but you can bet it it's on the Internet, someone somewhere transacted with it while on US soil thus triggering the DEA

  • Surely you'd put this data on your own cloud server / NAS and download AFTER you had arrived? But a laptop when you arrive and take an hour to set it up. You go through Customs clean as a whistle.

  • If you are going to sell drugs, launder money, run a gambling website, or whatever offshore. I think it is safe to assume that the U.S. gets crossed off your places to EVER visit along with countries that are willing to do our bidding.

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